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ARTICLE ID 194785

$________ – ANTITRUST – TRUCKING COMPANY LOYALTY REWARDS RULED ILLEGAL – VIOLATION OF SHERMAN AND CLAYTON ACTS

U.S.D.C., DE

In this action, a manufacturer of truck parts sued another firm for monopolistic practices. The defendant denied the accusation, and the matter was taken to trial. The case was ultimately resolved through a settlement while it was pending in appellate court.

There are only four direct purchasers of heavy-duty truck transmissions in North America. The defendant, in this action, Eaton Corporation, controls 80 percent of that market. The plaintiff, ZF Meritor LLC, a joint venture between Meritor, Inc. (subsidiary and ZF Friedrichshafen AG) and Meritor Transmission Corporation, entered that market in ________. The four purchasers utilize catalogs called data books to select components for their trucks, including transmissions. The defendant offered each of the four customers contracts providing rebates ("loyalty rewards") on condition of their purchasing 70 to 97.5 percent of their requirements from the defendant for a term of at least five years. The contracts further provided that if a manufacturer did not meet its target, the defendant could require payment of the rebates and pull the plug on the contract.

In ________, ZF-Meritor filed suit against the defendant, Eaton Corporation, in the U.S. District Court for the District of Delaware (Wilmington). The defendant was accused of Sherman Act and Clayton Act violations through long-term de facto exclusive dealing arrangements that foreclosed a substantial share of the market and harmed competition. The plaintiff sought damages, as well as injunction against further monopolistic behavior. The defendant denied violating the law through their practices.The jury found for the plaintiff, concluding that the defendant had violated the Sherman and Clayton Acts.

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